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Best International Funds to Invest in India 2020

Also known as foreign funds, international funds are mutual fund schemes that primarily invest in equity and debt securities in the foreign markets. These funds are often referred to as overseas funds. The fundamental advantage that international funds offer is that of good portfolio diversification across different economies, and capitalize from the growth potential of foreign companies.

To know more about international funds, visit: What are International Funds?

Top 5 International Funds to Invest in 2020

Here is a list of top 5 International Funds you can invest in 2020 to generate quality returns:
  • Fund Name 1- Year Returns 3- Year Returns 5-Year Returns
  • Franklin India Feeder – Franklin US Opportunities 23.40% 20.22% 13.65%
  • ICICI Prudential US Bluechip Equity 12.91% 14.67% 11.37%
  • Edelweiss Greater China Equity Offshore 29.28% 19.04% 10.49%
  • DSP US Flexible Equity 5.86% 9.99% 8.84%
  • Kotak Global Emerging Market 1.38% 4.30% 0.76%
{Note: Funds have been ranked on the basis of 5 year returns}

{Data as on May 14, 2020; Source: Value Research}

1. Franklin India Feeder – Franklin US Opportunities Fund

The scheme operates as a fund-of-fund and has invested 99.60% of its assets in the Franklin US Opportunities Fund and the remaining 0.4% in cash and debt instruments
  • Returns 1 -Year Returns 3 – Year Returns 5 – Year Returns
  • Fund 23.40% 20.22% 13.65%
  • Benchmark -14.86% -1.20% 3.87%
If you would have invested ₹1 lakh in this fund 5 years ago, the accumulated corpus would have been ₹1,89,603 (considering 13.65 CAGR, as of May 14, 2020)

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The scheme’s underlying mutual fund, the Franklin US Opportunities Fund, invests a majority of its assets in equity securities of US companies which demonstrate growth at higher levels than the overall US economy.

This fund is suitable for investors with a long term investment horizon and looking for overseas diversification of assets.

2. ICICI Prudential US Bluechip Equity Fund

ICICI Prudential US Bluechip Equity Fund is an open-ended equity scheme which predominantly invests in the equity and equity related instruments of the firms listed on the stock exchanges in the US.
  • Returns 1 -Year Returns 3 – Year Returns 5 – Year Returns
  • Fund 12.91% 14.67% 11.37%
  • Benchmark -14.86% -1.20% 3.87%
If you would have invested ₹1 lakh in this fund 5 years ago, the accumulated corpus would have been ₹1,71,333 (considering 11.37 CAGR, as of May 14, 2020)

The firm invests in ADRs/GDRs (depository receipts issued by companies to raise capital) issued by Indian and foreign companies. Also, the invested companies should have a minimum market capitalization of US$4 Bn.

The scheme also invests in companies with global presence, and are market leaders. These may have operations in India as well, but not listed on the bourses in the country.

The scheme is suitable for investors who are looking to own stocks in companies in the US market, that are not listed in Indian stock exchanges.

3. DSP US Flexible Equity Fund

An open-ended equity scheme that primarily invests in US equities, DSP US Flexible Equity Fund allows investors to diversify their investment portfolio by including units of Global Funds US Flexible Equity Fund (BGF-USFEF).
  • Returns 1 -Year Returns 3 – Year Returns 5 – Year Returns
  • Fund 5.86% 9.99% 8.84%
  • Benchmark -14.86% -1.20% 3.87%
If you would have invested ₹1 lakh in this fund 5 years ago, the accumulated corpus would have been ₹1,52,736 (considering 8.84% CAGR, as of May 14, 2020)

The term “flexible” in the scheme signifies that the fund manager of the underlying fund can invest in growth or value stocks as per the market requirements.

Through this fund, investors get an opportunity to capitalize from the largest equity market in the world – the US equity market – and its well diversified sectors.

4. Edelweiss Greater China Equity Offshore Fund

It is a fund of fund open-ended scheme that invests in JPMorgan Fund’s Greater China Fund. The underlying fund invests in equity securities of companies that are primarily domiciled in China, or carrying the majority part of their business operations in a country of Greater China region.
  • Returns 1 -Year Returns 3 – Year Returns 5 – Year Returns
  • Fund 29.28% 19.04% 10.49%
  • Benchmark -14.86% -1.20% 3.87%
If you would have invested ₹1 lakh in this fund 5 years ago, the accumulated corpus would have been ₹1,64,670 (considering 10.49% CAGR, as of May 14, 2020)

Investors who wish to capitalize from the amazing growth prospects offered by the Chinese economy can consider investing in this fund.

It is advisable to have a long term investment horizon for investment in this fund, as the underlying securities are quite sensitive to market fluctuations.

5. Kotak Global Emerging Market Fund

An open-ended equity scheme that predominantly invests in overseas mutual fund schemes whose portfolio is well-diversified with securities from global emerging markets.
  • Returns 1 -Year Returns 3 – Year Returns 5 – Year Returns
  • Fund 1.38% 4.30% 0.76%
  • Benchmark -14.86% -1.20% 3.87%
If you would have invested ₹1 lakh in this fund 3 year ago, the accumulated corpus would have been ₹1,13,462 (considering 4.30% CAGR, as of May 14, 2020)

The investment is done after thorough research and taking into account quantitative and qualitative indicators. This effectively protects the portfolio from market-risk.

There is reasonable diversification in the fund portfolio with appropriate allocation to different sectors and countries. Geographical diversification ensures that the fund earns high returns from growing economics and contains losses efficiently from under-performing economies.

Advantages of Investing in International Funds

Diversification is one of the key benefits of international funds, where the investors get access to a range of financial instruments issued in the markets across the world. Their portfolio is no longer restricted to investment options in the domestic market, but can also consist of equity/debt securities from different countries.

As international funds predominantly invest in financial instruments in various countries, they have the opportunity to capitalize from investment during different economic cycles. This helps in effectively mitigating market risk, and ensures minimal loss during critical market movements.

For an amateur investor, it is difficult to judge the market sentiment of a foreign country, due to lack of technical knowledge and credible sources. International funds allow these investors to invest in foreign markets under the guidance of financial experts.

International equity funds should be a part of your investment portfolio because when the Indian markets are in bad shape, at least some of your investment is gaining value.

How to Invest in International Funds?

There are two ways through which a person can invest in International Funds:

Online: You can invest in International Funds online seamlessly through online platforms (such as Paisabazaar.com) or directly through the websites of the Asset Management Companies (AMCs), offering the fund.

Offline: This conventional mode of investment requires an investor to fill a form and submit it at the nearby branch of the fund house, or invest through a broker.

To know more about the investment procedure for mutual fund
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